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* Lower provisions lift SocGen Q3 net profit up 57 pct
* Agricole Q3 net up 4 pct
* Econ policy hitting French growth, investment-Agricole CEO
* Litigation provisions up at Agricole, stable at SocGen
* Agricole shares down 4.3 pct, SocGen down 1.1 percent (Rewrites first paragraph, adds lending data from Bank of France, updates shares, adds link to Breakingviews)
By Maya Nikolaeva and Leigh Thomas
PARIS, Nov 6 (Reuters) - The chief of France’s biggest retail banking group Credit Agricole tore into government economic policy on Thursday as the lender and rival Societe Generale blamed weak domestic demand for falling revenues at home.
The comments from Agricole CEO Jean-Paul Chifflet came at a sensitive moment with Francois Hollande, France’s most unpopular president in polling history, set to defend his record in a prime-time mid-term television appearance.
They also exemplify a hostile relationship marked by government criticism of top bankers’ bonuses and blame of the banks for not contributing enough to the fragile economy.
“The absence of a clear vision and lack of coherence in economic policies is weighing on confidence and therefore investment and economic activity,” Chifflet told reporters on a conference call.
“Signs of recovery are proving elusive, unemployment is high, the real estate market is in correction, the public deficit continues to overshoot amid insufficient spending cuts,” Chifflet said.
Hollande, who will be questioned by TV and radio journalists as well as a panel of four French voters, heads a recently reshuffled government which is struggling to revive growth in the euro zone’s second-largest economy with unemployment stuck above 10 percent.
His approval rating was put at 12 percent in a YouGov poll, down from 15 percent the month before and the lowest score for a president in modern-day polling.
SocGen and Agricole, France’s second- and third-biggest listed lenders, both posted higher net profit, helped by lower provisions for bad loans, but cited an adverse economic environment in their key domestic market.
Agricole, which has the biggest share of France’s retail banking market, saw net income fall 10 percent at its regional bank network and 14.6 percent at its LCL brand of branches. SocGen said revenue from its French retail banking operations fell 3.2 percent in the third quarter.
Shares in Credit Agricole and SocGen were down 4.3 and 1.1 percent respectively by 1121 GMT, with traders citing disappointing results in French retail lending, as well as higher than expected provisions at Credit Agricole.
After the French economy stagnated in the first half of the year, the government is hoping for growth of 0.4 percent this year, accelerating to 1.0 percent in 2015. It has leaned on banks to boost lending to companies, but French firms are already borrowing heavily, with new credit up 5 percent in September compared with the same month last year, data from the Bank of France showed on Thursday.
The government has pinned its recovery hopes on expectations for a 0.9 percent rebound in corporate investment next year, boosted by plans for phased-in tax cuts of 30 billion euros. Yet the move has done little to relieve business concerns about the economic outlook, as unemployment weighs on consumer demand.
French banks are cutting costs and increasing cross-selling of products between business lines in a search of higher returns, at a time of tougher rules on risk-taking following the 2008-2009 financial crisis and rising litigation risks.
Credit Agricole said it had booked a provision of 65 million euros in the third quarter for general legal costs, bringing its legal provisions to 1.1 billion euros.
Chifflet said discussions with U.S. authorities over possible sanctions breaches were continuing, but he did not know when they were likely to be completed.
SocGen, which is due to send the results of an internal investigation to the U.S. authorities by the end of 2015, kept litigation provisions unchanged at 900 million euros.
Credit Agricole has focused operations on its key markets of France and Italy, after an unsuccessful international expansion spree to try to catch up with rivals.
SocGen derives a quarter of its revenue from operations in emerging markets and aims at maintaining that balance versus mature markets.
Worries about economic growth in France and exposure to Russia, hit by Western sanctions, are key reasons for investors to keep away from SocGen shares, Barclays analysts said in a note in September.
SocGen shares are down 30 percent from a peak in February. The bank is more cheaply rated than its peers on a multiple of 8.4 times forecast earnings, compared with 8.82 for BNP and 9.16 for Agricole, according to Reuters data.
SocGen said revenue and loan-loss provisions in Russia were stable despite sluggish economic growth there. (Editing by David Holmes)